25 Jun 2012

Law change for firms using internet based financial systems

6:27 am on 25 June 2012

A tax practitioner is supporting changes for firms that use internet based financial systems that store information in the so-called cloud.

Under the current law, companies are required to keep their records in New Zealand.

Information that's kept in the cloud is assumed to be overseas by Inland Revenue, and that requires official approval by the tax authority.

A tax partner at PWC Elle Ward says the Government will now change the law to recognise the growing use of these technologies, which she welcomes.

She says Inland Revenue requires businesses to keep their financial records available in English and in New Zealand for seven years, in case IRD wants to check them.

But Ms Ward says the issue with that as technology has progressed a lot of companies keep information in the cloud or other internet based systems and that's lead to some uncertainty as to whether the information is actually in New Zealand or not.

She says the changes could affect all companies from smaller companies that use service providers which have internet storage facilities as well, through to larger companies that may keep their financial information offshore in facilities in places like India or Singapore.

"It's a great initiative from the Inland Revenue Department to make sure that where technology overtakes the legislation that taxpayers still have certainty, that they can comply with the law and use the most modern technology in their businesses".